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Could cooperative housing solve today’s affordability crisis?

Co-Op City in the Bronx offers a model going forward — and a cautionary tale

Apartment buildings within Co-op City sit along the banks of the Hutchinson River in the Bronx. (Seth Wenig/AP)

There is an affordable-housing crisis across America. As of June, the median sale price of a home in the United States was nearly $400,000. In large cities, the cost of homeownership is significantly higher. The median apartment in Manhattan sells for well over $1 million. Renting provides no relief. The average apartment in Manhattan rents for an eye-popping $5,058 a month, and the median is $4,050, an increase of $800 in the past year alone. Washington, D.C., metro rents have soared 15.7 percent, and similar rising housing costs can be found in other American cities large and small.

There is a huge exception to this problem: Co-op City.

Co-op City, in the northeast Bronx in New York, is the largest housing cooperative in the United States, containing 15,372 apartments in 35 high-rises and seven low-rise townhouse clusters. Today, residents of the smallest three-room apartments pay an equity deposit of $22,500 to buy into the cooperative and thereafter $751 in monthly carrying charges, which include utilities. Even the residents of the largest 6.5-room apartments pay less than $1,700/month. Co-op City’s raison d’etre has always been affordability. It may provide both a model and a cautionary tale for communities facing crises of housing affordability across the country.

Today’s crisis of housing availability and affordability has a historical precedent in the post-World War II era that ultimately led to the construction of Co-op City. After World War II, returning service members increased pressure on the housing supply. In most of the country, this was met with growing numbers of single-family houses, mainly in fast-growing suburbs.

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Econ 101
Why is rent so high?
  • As the pandemic interrupted normal work, people spent more time at home. Many people moved from the city to the suburbs for more space.
  • Quickly, there were far more people looking to buy new homes than there were homes available.
Econ 101 is supported by Morgan Stanley.
  • Home prices then soared nationwide, and many people lost out in bidding wars. Prospective homeowners became prospective renters, pushing prices even higher.
  • Global supply chain snafus made materials difficult to obtain and construction workers difficult to hire. It took months longer than usual to get new rental units online.
Econ 101 is supported by Morgan Stanley.

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In New York state, the Mitchell Lama Program sought to increase the supply of urban housing for the middle and working classes. The program, which began in 1955, provided low-cost loans, tax abatements and a fixed rate of return to developers in exchange for their agreement to charge residents an affordable monthly rate. Both for-profit rental housing and nonprofit cooperative housing were eligible for the program. Between 1955 and the suspension of the program in 1974, over 100,000 affordable apartments were built under the auspices of Mitchell Lama. The largest nonprofit developer was the United Housing Foundation (UHF), which built over 30,000 apartments. Co-op City was the UHF’s biggest and final development.

Like other UHF projects, Co-op City was designed as a “limited equity” cooperative. When residents moved in, they “bought in” to the cooperative as a whole, rather than owning their individual apartments. As part of the cooperative, residents (or cooperators) paid monthly carrying charges, consisting of maintenance, utilities, operating expenses and the mortgage on the property. They participated equally in the management of the cooperative through an elected resident board. When residents left, they sold their share back to the cooperative and recouped their equity deposit.

At its 1966 ceremonial groundbreaking, Co-op City was heralded as the future of affordable housing. President Lyndon B. Johnson sent a congratulatory telegram saying that it represented “a significant development in the efforts to improve the quality of our national life.” Meanwhile, tens of thousands of potential residents flocked to Co-op City’s application office. These were not the city’s poorest residents; in fact they represented the broad socioeconomic middle swath of New York. Co-op City’s residents earned on average the median income for New York City as well as the nation as a whole; they were also about 75 percent White, similar to the racial demographics of the city at that time.

Despite the misgivings of critics who were concerned that Co-op City’s high-rise towers would be depressing incubators of anomie, the development’s new residents were enthusiastic about their community. In her memoir, Supreme Court Justice Sonia Sotomayor recounted that when she moved into Co-op City in 1970, “a much wider world was opening up to me … The differences [in this multicultural development] were plain enough, and yet I saw that they were as nothing compared with what we had in common.”

Yet neither the Mitchell Lama Program’s subsidies nor its cooperative model nor the enthusiasm of its residents were enough to guarantee stability or affordability.

During Co-op City’s construction phase, costs ballooned from the $235 million mortgage planned for in 1965 to over $390 million by the time construction ended in 1972. This rise was due to a combination of factors, including inflation, rising interest rates and corruption. Co-op City’s residents’ carrying charges soared in response, from the $22/room that was projected during the planning phase in the mid-1960s to a proposed $53/room in 1975.

Protests against carrying charge increases culminated in the largest rent strike in American history, in 1975-76, in which approximately 80 percent of Co-op City’s more than 50,000 residents withheld their carrying charge payments from the state. Charles Rosen, the leader of the rent strike, said, “I would suggest that the ultimate in cooperation is the manner in which the vast majority of our residents are working together to save our home.” The rent strike destroyed the UHF, nearly led to the bankruptcy of the New York State Housing Finance Agency and ultimately won residents direct control of the development. Impressive as this achievement was, it did not produce immediate financial stability.

The discovery of massive construction defects — including the need to replace the entire plumbing system — and ongoing inflation, along with state hostility to providing subsidies, meant that Co-op City residents faced cost increases through the mid-1980s. The rent strike and the continued financial and infrastructural problems that Co-op City faced in the 1970s and 1980s led many critics to see the development as an expensive boondoggle.

However, in the late 1980s that began to change. As housing costs began to rise in the years after New York City’s near bankruptcy, state and city officials began to recognize the importance of Co-op City’s 15,000 units of affordable housing. The state agreed to grant greater funds to repair construction defects. State officials also worked with Co-op City’s resident leadership to combat an early 1990s vacancy crisis in the cooperative.

Since 1991, resident carrying charges have risen a cumulative 80 percent, barely keeping pace with inflation — and well under the growth in housing costs elsewhere in New York. Meanwhile, according to census data, the median household in Co-op City remains near the median for both national and New York City incomes, as has been the case since the development was first occupied 50 years ago. In the early 2000s, residents decisively rejected a proposal to privatize the development, which would have meant abandoning its cooperative structure so that residents had the opportunity to buy their individual apartments.

Today, Co-op City is often lauded as a success story. At its 50th anniversary celebration in 2018, then-Mayor Bill DeBlasio said the development was “a vital ally in my administration’s efforts to expand access to affordable housing,” and Bronx borough president Rubén Diaz, Jr. referred to it as “one of the city’s true gems.” Since that time, housing costs have climbed even further into the stratosphere, making Co-op City appear even more exemplary, especially as politicians and activists across America call for a renewed government effort to build affordable housing.

In this context, it is worth paying attention to the lessons that Co-op City has to offer. First, large-scale affordable housing requires significant state investment. This kind of development could only be built in the context of a large state program like Mitchell Lama.

Furthermore, Co-op City’s cooperative model has also played an important role in its success. Because resident owners cannot realize profits from selling their individual apartments, turnover in Co-op City is low, and it has avoided gentrification, valuable qualities in today’s New York. The development’s affordability and stability are also due to the ongoing activism of residents. The advocacy of cooperators was most spectacularly demonstrated during the rent strike, but quieter militancy in the decades before and after helped put pressure on state officials to keep charges low.

When I spoke with Bill Eimicke, then-Gov. Andrew M. Cuomo’s “housing czar” in 2019, he explained that the memory of Co-op City’s rent strike and the near bankruptcy of the State Housing Finance Agency continued to haunt state officials in their ongoing negotiations with cooperative: “You didn’t have to be Albert Einstein to figure out that it was important that [Co-op City] be handled in a way that didn’t lead to a large, public escalating threat.”

Finally, it was only once the state agreed to work in tandem with Co-op City’s leadership and invest ongoing resources in its maintenance that the carrying charges finally stabilized.

Co-op City’s history suggests that cooperative housing represents a possible path to more equitable and affordable housing. That same history suggests that realizing this goal will require both sustained government investment and ongoing community vigilance.

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